Hot mining stock Great Bear Resources Ltd. [GBR-TSXV, GTBDF-OTC] said Friday August 24 that it is raising $10 million via a private placement financing led by an investment from Bay Street gold bug Rod McEwen and his company McEwen Mining Inc. [MUX-TSX, NYSE].
The private placement financing is comprised of units priced at $1.45, the company said in a press release on Friday morning. It said Rob McEwen is purchasing $4.8 million of the financing and McEwen Mining is investing another $1.2 million for a total of $6 million.
Upon completion, Rob McEwen and McEwen Mining will collectively own 18.8% of Great Bear on a partially diluted basis.
Great Bear, which was trading at 52 cents on August 17, 2017, rallied sharply on the news, jumping to a 52-week high of $1.93 in early trading Friday before easing back to $1.83 for a gain of 18.83%.
Prior to the financing deal with McEwen, Great Bear shares rallied on news of a high grade gold discovery in the Hinge Zone at the company’s Dixie Lake Project in the Red Lake, Ontario mining district.
Highlights include drill hole DHZ-003, which returned 16.35 metres of 26.91 g/t gold, including separate intervals of 5.05 metres of 51.39 g/t gold and 1.0 metre of 112.63 g/t.
Drill hole DHZ-004, a follow-up drill hole completed 15 metres vertically below DHZ-003, intersected higher-grade gold mineralization, returning 7.00 metres of 44.47 g/t gold, including 2.00 metres of 143.24 g/t gold, including 1.00 metre of 224.03 g/t gold.
The company said the newly reported intercepts from the Hinge Zone are shallow, occurring above 110 metres vertical depth and are open in all directions.
In July, 2017, Great Bear acquired Newmont Mining Corp.’s [NEM-NYSE] 33% stake in the Dixie Lake project for $80,000 in total cash payments over four years. Three months later, the company acquired an additional 26 claims at Dixie Lake, which now covers 13,000 hectares.
Through the purchase of Newmont’s interest, Great Bear said it will have a 100% stake in the expanded project and all royalties to these claims.
“We are very pleased to have Rob McEwen as a partner of Great Bear Resources. His record of success in the Red Lake district is quite simply unmatched,” said Great Bear President and CEO Chris Taylor.
He was referring to the fact that McEwen built Goldcorp Inc. [G-TSX; GG-NYSE] into a gold mining powerhouse in the 1990s. One of the company’s key assets is the Red Lake Mine at Balmertown, located about 20 km from Dixie Lake.
The private placement units consist of one common share and one-half of one common share purchase warrant. Each whole warrant will be exercisable into a common share of Great Bear at a price of $1.75 for a period of two years.
A portion of the financing will be brokered by IBK Capital Corp. of Toronto, including the units purchased by Rob McEwen and McEwen Mining. Under an agreement, IBK will receive a cash commission equal to 6% of the amount raised. Great Bear will also issue to IBK brokers warrants equal to 6% of the number of units sold to investors introduced by IBK.
Each broker warrant will be exercisable into a unit at $1.45 per unit for a period of one year.